Strategic Analysis of Woolworths: HI5019 Strategic Info Systems

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This report provides a comprehensive strategic analysis of Woolworths Supermarket, a major player in the Australian retail grocery market since 1924. The analysis includes an examination of the company's business background, the retail industry environment, and a general environmental scan considering economic, physical, socio-cultural, global, technological, legal, and demographic factors. Porter's Five Forces are applied to assess the industry's competitive intensity, and a competitive environment analysis identifies key rivals like Aldi. The report also explores Woolworths' internal resources, differentiating between tangible assets like stores and inventory, and intangible assets like brand reputation. Key capabilities such as effective supply chain management and brand reputation are identified, along with a core competencies analysis. Finally, the report proposes suitable information system improvements tailored to Woolworths' needs and provides strategic recommendations. Desklib offers access to this and other solved assignments for students.
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Assignment 1 (Strategic Analysis)
Individual Assignment

HI5019 STRATEGIC INFORMATION SYSTEMS

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Contents
Introduction
......................................................................................................................................3
Part 1 – (External Analysis)
.............................................................................................................4
1. Business Background
...............................................................................................................4
2. What industry is it
....................................................................................................................5
3. General environment analysis
..................................................................................................6
4. The industry environment
........................................................................................................6
5. Competitive environment
........................................................................................................ 6
6. Opportunities and threats
......................................................................................................... 6
Part 2 – (Internal Analysis and Proposal)
........................................................................................ 6
1. The Firm’s resources, tangible and intangible
.........................................................................6
2. Capability identification
.......................................................................................................... 6
3. Core competencies analysis
..................................................................................................... 6
4. Propose suitable information system that meets the chosen company’s needs.
......................6
5. Evaluate the proposed system and provide your recommendations.
.......................................6
Conclusion
....................................................................................................................................... 6
References
........................................................................................................................................6
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Introduction
External and internal analysis of organizations provides an overview of the current situations and

problems which will analyze in this assignment. This assignment is based on the
Woolworths
Supermarkets
which is established in the year of 1924. The organization has a large chain of the
supermarket stores in Australia which is providing packaged food and vegetables to Australian

people. A large range of products and services are available by the chain of the supermarket in

Australia. This assignment will mainly produce an overview of the external environment of the

company. In the starting of this assignment will provide an overview of the company and

industry in which it is working. That general environment analysis will be produced in the

assignment and then an industry analysis will be executed in the assignment. Competitive

environment will also be analyzed in the research and those opportunities and threats for the

company will be determined in the research. After that, an internal analysis will be conducted of

the organization in which tangible and intangible resources will be analyzed. Organisational

capabilities will be analyzed in this assignment for core competencies will also be analyzed. At

the end of the assignment, the suitable information system will be developed for the organization

according to the needs of the situation and some recommendations will be developed for the

organization.

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Part 1 – (External Analysis)
1. Business Background

Woolworths Supermarket has been established in the year 1924 in the Duopoly market. The

company is having its specialization in the packaged food, vegetables, fruits, meat and other

household products. The company is currently having approximately 1000 stores in Australia in

which 19 stores are considered as convenience stores. Woolworths Supermarket is also working

with the online channel to sell its products in the targeted market. Different loyalty schemes are

developed by the company to engage and retain its customers for a long time to retain its market

position. Approximately 25000 employees are working with the Woolworths to provide a better

service to the customers. The company believes to provide quality in the large range of products

to provide convenience to the targeted market (Woolworths Group, 2018).

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2. What industry is it
Woolworths Supermarket is working in the business to customer’s retail market. It can be

considered the retail grocery market in Australia. This industry is considered the most

competitive market in Australia in which several companies are currently working. It is very

crucial to managing the existence in the market according to the needs and demands of the

customers. It has been analyzed that in the year 2017 this industry has generated $102 billion as a

sum of revenue. Approximately 3, 62,000 people are employed in this industry and providing

their services for the targeted market. The annual growth of the market has been analyzed by 3%

on an average rate from the year of 2013-2018. It has been analyzed that around 1800 small,

medium and large-sized organizations are working in the retail grocery and supermarket industry

of Australia which has developed a huge competition in the market (IBISWorld, 2018).

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3. General environment analysis
Basically, in the general external environment, almost those factors are considered which creates

a huge impact on the internal environment and on the operations. General environment analysis

of Woolworths Supermarket is given below:

Economic
: GDP, inflation, interest, unemployment, purchasing power rates are mainly
considered in this factor which creates a huge effect on the internal operations. GDP rates effects

on the development scope and also on the production of the products. Inflation directly effects on

the price and cost structure of the organization. It is essential for the management to make

changes in the strategies for cost determination and pricing of the products (
Portney, 2013).
Physical
: In this factor mainly man-made things are considered which directly effects on the
people. Tangible assets are mainly considered in this physical environment. Infrastructure is the

key concern which may affect the organization. Change and development in the infrastructure

may effect on the internal operations of the company. Regular change in the infrastructure

creates a need to make changes accordingly in the internal working environment for the

employees as well (
Ryu, et. al. 2012).
Socio-cultural
: These factors create a huge effect on the development of strategies of the
organization. Education, language, Attitudes, and beliefs of the people where the company is

operating its business create a huge effect. Woolworths Supermarket is working in Australia

where multicultural factors lead so it is essential to use these factors in the strategies

development.

Global
: Internationalisation is also affecting the business of the company. Different international
companies are making their presence in the grocery supermarket industry of Australia.

Technological
: Advancement in the technology creates a compulsion to make changes in the
operations. Adoption of the online sales channel is also affected by the technological factor. It

helps to manage the lead in the sector (
Hakansson, 2015).
Legal
: The Company is working in the retail market which directly effects on the consumers so
it is essential to use the legal framework in the internal business operations. It is essential for the

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organization to provide its services according to the Australian Consumer Law which can help to
develop a legal framework for the operations.

Demographical
: Population is a most considerable factor which is also linked with the external
environment. Growth in the population in particular geographical zone effects on the demands

and supply chain so it is essential for the company to analyze the population growth of each of

geographical area where it is working.

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4. The industry environment
It is essential to make an analysis of the industry environment by the using porter five forces

analysis on the whole retail grocery and supermarket industry of Australia. The analysis of the

industry is given below under the points-

Supplier power
– Retail industry mainly focuses on the sales of the products. Retail grocery and
supermarket industry has a huge influence on the supplier power. Grocery retailers are having a

large chain of suppliers and price and demands of the products is highly affected by the supplier

power. It is essential for the companies to fulfill the demands of the supply but the companies

depend on the suppliers to accomplish the market needs (
Dobbs, 2014).
Buyer power
–Retail grocery is directly linked with the customers and it is highly influenced
with the buyer power. Pricing of the products has to be appropriate according to the customers

which can help to manage the sales.

Potential entrants
– Growth and development of the existing organization attract to the others to
start setup in the retail grocery. The retail grocery industry has a huge threat of new entrants due

to higher demands and profits in the market. Consistency in the sales is the other factor which

motivates to the big business groups to mark their presence in the retail grocery market.

Substitute products
–Retail grocery organizations sell the packaged products from different
manufacturers and suppliers. It always has a threat of the substitute of products due. Most of the

customers consider the price factor in buying any product from the supermarket which may

influence to buy a substitute product from the supermarket.

Rivalry among competitors
–Many companies are working in the retail grocery and
supermarket industry as Aldi, Coles, and Woolworths Supermarket etc. which has created much

competition in the organization (
Ewing, et. al. 2013).
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5. Competitive environment
Some of the factors are given below to analyze the competitive environment of the Woolworths

Supermarket-

Strategic group
– It can be considered the group of companies which have the same business
models. Aldi, Wesfarmers, Coles and Woolworths Supermarket are the strategic group of

companies.

Rivalry in the group
–Aldi is the key rivalry for the Woolworths Supermarket due to recent
growth in the business of Aldi.

Capabilities of relevant firms
– Aldi has a long chain of the retail stores approximately 500
stores in the all over Australia enhance the capabilities to deal with more customers (ALDI,

2018).

Strategies of relevant firms
–Aldi has used the economic pricing strategies in Australian retail
and grocery industry as well which has helped to make a successful debut in Australia.

Threats from rivalries
– The major threat from Aldi is on the market share of the Woolworths
Supermarket. Regular growth in the sales and business has developed the risk on the Woolworths

Supermarket.

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6. Opportunities and threats
Some of the opportunities and threats are given below for the Woolworths Supermarket –

Opportunities

Expansion of business in the electronic
market segment

International market
Expansion in the clothing market
A restaurant chain in the supermarket
Threats

Enhanced rivalry
International companies
Fluctuations in demands
Unstable economic market conditions
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Part 2 – (Internal Analysis and Proposal)
1. The Firm’s resources, tangible and intangible

There are several resources of the firm and has been classified on the basis of tangible and

intangible resources. Tangible resources are physical components of the business. In the context

of Woolworth's lands, stores, inventory, funds, equipment such as loading vehicles are all the

form of tangible resources. Tangible resources generally have depreciation value and will not

provide a significant advantage to the Woolworths in the long run as competitors can easily

acquire the identical form of resources. It has been stated that the total average tangible assets of

Woolworth’s group are $ 13,042 million (Woolworthsgroup.com.au, 2018).

On the contrary, intangible resources are the rest of the resources that don’t have any physical

identity but still can be acquired by the company. In the context of Woolworths Brand

reputation, patents, trademarks, intellectual property rights are all the example of intangible

resources of the company. The brand reputation of the Woolworths has developed over a time

and cannot be purchased by money. Intangible resources of the Woolworths are the primary

source of the competitive advantage. Intangible resources have great value to the company

though they don’t have the physical form or identity and can’t the state in the financial report

(Woolworthsgroup.com.au, 2018).

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2. Capability identification
Woolworths will adopt an integrated form of strategy by utilizing the combination of both the

cost leadership and differential components. There are several forms of capabilities identified in

the context of the Woolworths.

Effective supply chain:
Woolworths has an efficient form of the distribution network and has
both the capability and resources are available for outbound and inbound logistics. Combination

of both the tangible and intangible resources has achieved savings in cost to achieve a higher

EBIT over Coles. The level of cost-saving benefits will provide Woolworths an unfavorable

public identity. It has been identified that the supply chain of Woolworths has very effective and

it helps the company in achieving the competitive advantage (Mindtools.com, 2018).

Brand reputation:
Reputation of Woolworths as a fresh grocery was been built over the years.
This has been done by the improving significantly over the years by implementing the consumer

experiences and feedbacks. So it has been stated that brand reputation is the capability. Brand

reputation is identical for the Woolworths and is providing differentiation for its competitors.

Top management:
Despite the impacts of recession and rising inflation rate, Woolworths is able
to achieve the high growth rates. All this will attribute the top management functioning of the

Woolworths top management.

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3. Core competencies analysis
Core competence analysis is essential for any business organization sustainability and progress.

Woolworth’s has always focused on the core competencies and upgraded their capabilities to

develop their strengths along with eliminating their weaknesses. In order to analyze the three

tests or criteria it is significant to analyse the true core competencies. These are:

Relevance:
This is the test of relevancy. The competence analysis must provide their customer
something that will strongly influence them. It has been evident that the effective supply chain is

the attribute that is strongly influencing the clients and customers of the Woolworths and because

of this attribute is going lead ahead of their competitors in the market (Wilkinson, 2013).

Difficulty of imitation:
This test will help in identifying the USP of the company. It is very
crucial for the organization to develop the core competencies that are difficult to imitate. In the

context of Woolworths, they are selling actually fresh food and it is their core competence also

aligning them with the capabilities of Brand reputation. The customer is identifying the brand

reputation of Woolworth with the fresh foods and also stated them as fresh people (Wilkinson,

2013).

Breadth of application:
This is the test that testing the competency of the organization to
penetrate the potentially large number of markets. In the context of the Woolworths, it has been

found that the management of the Woolworths will be effective and capable to explore the

different market and the outcome of this Woolworths has been expanded themselves in several

territories of the region.

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4. Propose suitable information system that meets the chosen company’s needs.
An effective information system is the current need of the business world and it is very crucial

that Woolworths should upgrade their information systems solution. There is an effective

information solution Known as Dimension Data`s Management Planning and Control (MPC)

solution that has been supplied by US-based Comshare to integrate budgeting, planning,

consolidation via single platform interface (ITWeb, 2018). It will provide Woolworths Ltd a

single national system of reporting that will enable the users to access the correct information via

servers to from any business location. This application is suitable for the context of the

Woolworths because of the user-friendly interface and also the ability to enter the information

via remote locations. This Information system solution will able to simplify the billing of

materials and create a balance of control and flexibility. Currently, Woolworths is using the

currently the Lotus spreadsheets for conducting financial analysis but that Information system

solution is not up to the mark as for recent changes in the business world.

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5. Evaluate the proposed system and provide your recommendations.
This has been evaluated that the proposed form of system is very helpful the operations of the

Woolworths functioning. This Information system solution will help in gaining the productivity

more rapidly than the current system. The most special benefit of this system is that it will create

the new performance parameters for the company and also it will help in getting information

from the centralized servers on the more effective way and also help in conducting the deep

analysis of the financial statistics (IT Web, 2018). This Information system solution is suitable

for Woolworths because it will help the company in analyzing the key development areas. This

proposed system has also beneficial for the end users of the Woolworths as it is providing the

support to end users more quickly than the current Information system. As per the trial run of the

proposed system, it has to recommend by the Woolworths management team that this proposed

IS solution will help to forecast and planning the sales that are not possible in the current IS

Solution.

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Conclusion
On the basis of the above report, it has been concluded that external environment analysis

supports to identify the threats and opportunities linked with the business. Analysis of rivalries is

significant to make changes in the market and sales strategies of a particular organization. It has

been analyzed that internal analysis supports to execute changes in the business to make a

successful attempt of the objectives. It is significant to analyze the resources and capabilities of

the organization to identify the possibilities of changes in it. Competencies analysis is effective

to conduct in the organization to identify that capabilities and sources are properly utilized or not

in the organization.

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References
1.
ALDI. 2018. About Aldi [Online]. Available at: https://corporate.aldi.com.au/en/about-aldi//
[Accessed on 22 Aug. 18].

2.
E. Dobbs, M. 2014. Guidelines for applying Porter's five forces framework: a set of industry
analysis templates.
Competitiveness Review, 24(1), 32-45.
3.
Ewing, M. T., Wagstaff, P. E., & Powell, I. H. 2013. Brand rivalry and community
conflict.
Journal of Business Research, 66(1), 4-12.
4.
Hakansson, H. 2015. Industrial Technological Development (Routledge Revivals): A
Network Approach. Routledge.

5.
IBISWorld. 2018. Supermarkets and Grocery Stores - Australia Market Research Report
[Online]. Available at: https://www.ibisworld.com.au/industry-trends/market-research-

reports/retail-trade/food-retailing/supermarkets-grocery-stores.html [Accessed on 22 Aug.

18].

6.
ITWeb. 2018. Woolworths selects Web-based strategic planning and analysis solution.
[online] Available at: https://www.itweb.co.za/content/dgp45vaGO1ZMX9l8 [Accessed on:

22 Aug. 2018].

7.
Mindtools.com. 2018. Core Competencies AnalysisBuilding Sustainable Competitive
Advantage.
[online] Available at: https://www.mindtools.com/pages/article/newTMC_94.htm
[Accessed on: 22 Aug. 2018].

8.
Portney, K. E. 2013. Taking sustainable cities seriously: Economic development, the
environment, and quality of life in American cities. MIT Press.

9.
Ryu, K., Lee, H. R., & Gon Kim, W. 2012. The influence of the quality of the physical
environment, food, and service on restaurant image, customer perceived value, customer

satisfaction, and behavioral intentions.
International Journal of Contemporary Hospitality
Management
, 24(2), 200-223.
10.
Wilkinson, J. 2013. Core Competencies Definition • The Strategic CFO. [online] The
Strategic CFO. Available at: https://strategiccfo.com/core-competencies/ [Accessed on: 22

Aug. 2018].

11.
Woolworths Group. 2018. About us [Online]. Available at:
https://www.woolworthsgroup.com.au/page/about-us/ [Accessed on 22 Aug. 18].

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12. Woolworthsgroup.com.au. 2018. Strategy and objectives - Woolworths Group. [online]
Available at: https://www.woolworthsgroup.com.au/page/about-us/our-approach/strategy-

and-objectives [Accessed on: 22 Aug. 2018].

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